Monday, June 3, 2013

Hot Money Heading For The Exits in Real Estate

Ther has been a number of stories lately commenting on how hedge funds, private equity companies and Wall Street are already taking profits and getting out of the real estate game. Sound familiar? The model of buying homes and renting them out a profit appears to be failing. Getting a 3% return after expenses, given vacancies and other unexpected problems isn't very attractive. Any appreciation to be had, has already occurred and the smart money is looking to dump after the pump. This article about the Smart Money Exiting the Real Estate Market by Dr.Housing Bubble tells the inside story of the kind of market we really have.

 It's easy to get lost in all the media hype and talking heads, that is how they make their money. Don't take the bait. In the words of one of the most famous rock bands of all time, The Who, "We don't get fooled again!" 


Anonymous said...

Calculated Risk has a blog on the same topic today, with a very different take. I think I'll stick with the blogger with the proven track record.

Anonymous said...

That's the problem when someone is way ahead of the curve - no one believes them until it is too late - and then the same bunch will ask "Why didn't you tell us?"

Great job at spotting a trend ahead of the pack.

These same wolves will ravage the rest of the economy in the same manner. said...

Yes, it's the same old story. When everybody is talking about it and feeling like they are going to miss out, it's too late. The big fish have already feasted and it's the little fish that get caught.

WarChestSM said...

8/1/11 - "Culver City coming down in price" No, sorry, prices are way up.

8/7/11 - "Here it is Sunday night, before the awaited opening of the U.S. stock markets tomorrow morning. After last week and the first ever U.S. credit downgrade over the weekend, many are nervous. And rightfully so. The question is, could this be the start of another big leg down in real estate? I believe so." Nope, dead wrong again. In fact, S&P was out today upgrading their outlook on the US.

3/13/12 - "Buying during an election year" Wrong again, it would have been great to buy then.

I challenge this blog to shut down within a certain time frame if prices don't come down. What is the point of maintaining this festering sore of wrongness? When prices don't fall this year or next year or the year after that you are more and more wrong. That is doing a disservice to readers. I too wish it was cheaper to buy in great locations but it just ain't so. said...

Oh, blessed art thou WarchestSM or is it WarchestCC now, for stopping by this modest website. I guess this means that "Victory at Last" will not be your last post after all. Perhaps it's time for you to start up your self-serving propaganda about Culver City, to save everyone from "missing out" on being enslaved to a bank for next 30 years.

I started this blog back in March of 2007, and how dare you tell me when I should end it or what I should do with it. I am glad you are passionate about your beliefs, but they are only that. Nobody has all the answers, and the market changes daily. For you to proclaim that you have everything figured out and are always right is merely a sign of your ignorance and arrogance. Because the Southern California Market has reverted back to a casino currently with institutional investors and flippers etc., doesn't mean this boom will last forever. History repeats itself, if you can take a minute to take off your blinders.

The only reason I posted your rant here is to let people see how strange your behavior is. If you attempt to slam me on this blog again, I will throw you into spam where you belong and you will be reduced to a nameless troll.

If this website bothers you so much, don't read it, and please let others decide for themselves what to read and what to believe.

Much to your disbelief, this market is anything but normal and we are still in unchartered territory.

Good luck on your Culver City purchase. I do hope it works out well for you.

Anonymous said...

Mark my words everyone on here will look back in 10 to 20 years and secretly wish we could buy these prices.

We were like cattle on this website as prices came down, staring them in the eye. Now they’re back up to bubble highs as no one here made a move. Your chance is gone. Beverly Hills, Santa Monica, and other high end desirable cities, its just not going down.

I admit defeat. I should of bought 2009 or 2010. But I listened to the masses telling me about hidden bank inventories. What a bunch of BS. Those banks are not sitting on many homes. Not in the Westside. I think the financial mess is in other non desirable states and cities. Like Detroit. In Southern California no way.

I think I’m now permanently priced out of the Westside.

Anonymous said...

Please google Robert shiller and read his latest piece about how housing is not a good investment. Invest whatever you can in a vanguard target date retirement fund. Most importantly because it is all index funds
You will make a better return and not have to pay interest taxes maintenance etc.

Anonymous said...

Please google Robert shiller and read his latest piece about how housing is not a good investment. Invest whatever you can in a vanguard target date retirement fund. Most importantly because it is all index funds
You will make a better return and not have to pay interest taxes maintenance etc."

OK, sounds great & all, but in terms of housing, what is your plan then? Rent forever?

Anonymous said...

Renting forever is a viable option.
Housing returns 1% over the last 100 years(not including taxes and maintenance)
Stock market 6% a year
Think I'll rent forever and keep adding to my index funds.
Even Warren Buffett says he would have done better if he never bought and instead invested in the stock market.
Course if you don't buy an index fund then all bets are off for most investors

Anonymous said...

Guess im different in that I treat my retirement investments as my retirement investments, and my house as my house. I never once suffered under the delusion a house would make me rich.

In addition to the usual motivations (i.e. do what you want to the place), my biggest motivator is someday being (largely, but not entirely free) of payments. I simply dont want to be paying rent when I am 90.

As I see it, ive got 50, 60 more years on this planet left, and I can either rent money for 30 years or rent a house for 60. I choose the former, but again, thats just me.

Anonymous said...

or you could invest in a US total stock market index fund and buy 3 houses with the money in 30 years

a 40,000 house bought in the 70s would be worth about 500,000 today
40,000 in the s&p 500 in the 70s would be worth about 1.3 million. and you would be collecting a 2% dividend on that money instead of paying taxes and maintenance on your house :)

Anonymous said...

Anonymous said...

"or you could invest in a US total stock market index fund and buy 3 houses with the money in 30 years"

Better still, why not invest and buy 6 houses in 60 years, moving in, just as you draw your last breath and depart this planet???

Sigh. Sadly, I dont think you & I are speaking the same language in that you are still thinking of housing SOLELY from the investment perspective.

Yet, we humans often make choices that are not the "best" investment possible. We could all drive econobox hyundais, yet some of us buy nicer cars because they make us happy. A boat is pretty much the worst investment possible, yet, if we can afford it, we buy it because it makes us happy.

Likewise, another thing that would make many (not all but many) of us happy would be, not having to deal with shit repairs from cheap ass landlords. For example, the floor in the bathroom needs to be repaired & a proper job would cost 4K. Yet, this cocksucker LL gets one of his "guys" to patch it for a hundred bucks, only to have it need another repair 4 months later.

I would gladly pay the 4K to fix it if it were my house, yet it isnt. And no, I cant take him to court, and no, I dont want to have to move again - I JUST WANT HIM TO GOD DAMN FIX THE THING, AND LEAVE ME THE F*CK ALONE!!!

Sorry for the rant but you can see where I am going with this. My landlord is thinking like an investor when he does the patch job versus fixing it for good. Yet, if he had to live with this as a constant nagging concern would he? How much is it "worth" not to have to repeatedly deal with this crap on a 3 times a year basis?

And please spare me the retort "well ive got a good landlord" or "you should have done more research" or "you can always move". The point is a larger one which is, for many (not all of us but many), renting is not a permanent solution, for many many many reasons - and not all of them are purely, 100%, absolutely, positively, driven by a financial perspective.

I really hesitate to say this because it may sound like I am advocating buying something you cannot afford, which isnt the case. My point is simply, IF you have your financial affairs in order and IF you are investing such that you are on track to have a good nest egg for retirement, and IF you are the type of person that values buying more than the extra money that comes with a lifetime of renting, whats the harm in buying?

Anonymous said...

Sorry, I thought you were the person that said they were "priced out" of the westside. Sounds like you need a nicer landlord. If you can afford to buy a house;have the downpayment and can pay the mortgage by all means, have at it! I personally cannot afford to buy on the westside and am happy renting until I move somewhere it is practical for me to buy. Good Luck.

Anonymous said...

Any support is appreciated